Elderly Increasingly Being Cut Off From Banking Services as Rural Branches Close, MPs Hear

A general view of the village of Burford, Gloucestershire, England, on March 29, 2020. David Davies/PA Wire

Older people living in rural areas are being cut off from banking services owing to the falling number of local branches, MPs have heard.

Simon Hoare, the MP for North Dorset, told colleagues in the House of Commons on Monday that recent bank branch closures have been disproportionately impacting rural communities, which tend to have high numbers of retired and elderly people.

MPs also heard that older constituents struggle to physically get to other branches in larger towns outside of their communities because they either no longer drive or there are inadequate public transport networks. Access to online banking is also not always an option because some seniors do not have internet.

“According to Age UK, four in 10 adults over the age of 65 do not bank online, and three quarters of those who are over 65 have expressed the very clear desire that they wish to bank in person. The over-80s, people with disabilities, and those on low incomes disproportionately want physical facilities, and yet they are being denied them,” Hoare said.

Hoare’s concerns are echoed by a 2022 study from the Financial Conduct Authority (FCA), which found that a significant number of older people rely on face-to-face banking and remain dependent on cash.

‘Rural Proofing’

Hoare made the remarks during a debate he had proposed on the impact of bank closures in rural areas.

He said that in his constituency alone, 14 bank branches have closed, leaving only five.

According to a House of Lords Library paper on the impact of bank branch closures on rural communities published earlier this month, the number of bank and building society branches in the UK has fallen from 21,643 in 1986 to 6,870 in 2024.

Recently-passed regulations by the FCA have given communities the ability to request Link, the UK’s largest ATM network, to conduct an assessment on cash access needs. If a gap in services is found, Link may order that an ATM is installed. Link may also task Cash Access UK, a not-for-profit company funded by major banks, to install a banking hub, which is a shared branch where multiple banks provide services.

The Post Office is also stepping in to provide some banking services.

However, Hoare and other MPs argued that the rubric for assessment “is blind to whether it is an urban or a rural setting” and does not serve all communities in need.

“There must be rural-proofing of the rubric for these decisions in the first instance and a better understanding of the geography of our rural areas as well as of the lack of public transport or other connectivity,” he said.

A banking hub in Axminster, Devon, England, on May 26, 2024. Victoria Shaw/PA Wire

Hoare said that market towns operate on a “hub-and-spoke” model, meaning that as the market town and the businesses within it grew, surrounding villages benefited from access to those services. That means that when a bank branch is lost, not only is the town affected but the rural communities connected to it.

He added that while the Post Office has stepped up to provide some banking services at their branches, “customers cannot use them to talk to someone from their bank to discuss their overdraft, loan, mortgage, business credit card maximum, or whatever it may happen to be.”

Likewise, cash access from an ATM is not the same as access to banking services, he argued.

Rural Communities Are Fragile

Addressing the Exchequer secretary, James Murray, the North Dorset MP said: “The assessment of access to cash needs a rural dimension, and there needs to be a much more granular understanding of the hub-and-spoke geography of a rural economy, which is very different from an urban one.

“We need to move away pretty quickly from merely assessing as satisfactory access to cash as defined by access to an ATM.”

He also asked the government to put pressure on banks to provide community services and suggested an amendment to the Financial Services and Markets Act 2023 “to give the FCA greater powers to look at wider banking services, not just cash.”

“Our rural communities struggle. Our economies are fragile, and wages are usually lower than in urban counterparts. Another bank closure is not just another bank closure in a rural market town,” he said.

Responding, Murray said the government understands the importance of face-to-face banking and banking access to local communities.

“Our objective is to ensure that people and businesses have access to banking services, supporting local communities and local economic growth. Work on that is well under way, and we are working closely with banks to open 350 banking hubs by the end of this Parliament,” Murray said, noting that the 100th banking hub was opened in December with more than 200 announced in total.

The minister added that Link considers population size, vulnerabilities, local businesses, public transport links, and the distance to the nearest branch when conducting assessments.